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With HOLX Stock Near 52-Week High, Should You Buy More or Play Safe?
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Shares of Hologic (HOLX - Free Report) are showing impressive gains of late, trading quite near its 52-week high of $84.67. The stock closed Thursday at $80.99, just 4.3% below the highest point. In the past three months, the women’s health company’s stocks have gained 8.5%, surpassing the industry’s growth of 2% and the S&P 500’s return of 2.8%. Hologic has also performed better than the industry rivals QIAGEN (QGEN - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .
3-Months Performance
Image Source: Zacks Investment Research
The stock is also trading above its 50-day and 200-day moving averages, suggesting robust investor confidence and a positive market outlook.
HOLX Shares Trade Above 50-Day and 200-Day SMA
Image Source: Zacks Investment Research
Hologic Shines Internationally, Banks on Growth Drivers
The latest third quarter of fiscal 2024 ended the long streak of COVID-driven declines for Hologic, wherein both the top and bottom lines returned to growth. This impressive performance is boosted by the early wins in the company’s international business, reflecting its strategy of direct approach and efforts to improve the standards of care in new markets. In the Diagnostics segment, the Molecular Diagnostics arm stands out as the principal revenue generator with vast potential in the untapped international markets. The ever-expanding menu on the Panther instrument system, combined with its superior workflow and ease of use have driven increased demand and bolstered Hologic’s competitive position in the industry.
Additionally, the company is poised to increase its share in global STI (sexually transmitted infection) testing, having dominated the U.S. market for years. The introduction of liquid-based pap tests in new regions is likely to accelerate growth in the cytology and cervical cancer screening market. Hologic’s Genius AI digital cytology system, approved by the FDA earlier this year, is effectively addressing the lack of cytologists in markets outside the United States.
In the Surgical division, the company is experiencing greater success with Myosure internationally, driven by the increasing demand for minimally invasive options in underpenetrated markets. Myosure’s position as the only minimally invasive alternative to a complete hysterectomy in many regions represents a promising opportunity for its further expansion. Meanwhile, the increasing adoption of breast imaging platforms, both domestically and internationally, is driving the revenue growth of the Breast Health segment. The acquisition of Endomagnetics has further diversified the business, adding cutting-edge interventional breast care solutions to the portfolio.
HOLX’s Focus on Margin Improvements
Not only revenues and EPS growth, but Hologic also made a strong return to the pre-pandemic operating margin levels in the fiscal third quarter. This is even more impressive, given the company’s substantial growth in the international business, which has expanded more than 40% since 2019. Hologic has recaptured its strong sector margin profile by focusing on operational efficiency and moving past the amortization of costly chips in Breast Health purchased during the chip shortage. Although its newer revenue growth drivers come with a lower operating margin profile, the company confidently aims to achieve the 31.5% pre-pandemic margin for the fiscal 2025.
Concerns Weighing on Hologic
Hologic’s Skeletal Health business has been marred by headwinds from a temporary halt in shipments of Horizon DXA systems. The stop-ship mainly resulted from a non-conformance regarding the electromagnetic compatibility requirements. This also made the company reduce the midpoint of the prior revenue guidance by $5 million for fiscal 2024, representing nearly a $20 million setback from the ongoing issues.
Meanwhile, the updated United States Preventive Services Task Force (USPSTF) Breast Cancer Screening Guidelines recommends all women get screened for breast cancer every other year, starting at age 40 through 74. This shifts from the previously recommended starting age of 50. Hologic is not happy with the update and feels these guidelines are inadequate. The company is currently urging for annual screenings to ensure early detection and improved outcomes. Furthermore, any adverse developments in the Task Force’s cervical cancer screening guidelines can bring further uncertainties.
HOLX Estimate Trend
Estimates for Hologic’s fiscal 2024 earnings have increased by 0.2% to $4.09 in the past 30 days.
Image Source: Zacks Investment Research
HOLX Stock Appears Undervalued
Valuation-wise, Hologic’s shares are trading at a discount compared to its peers in the industry. The stock has a forward 12-month price-to-earnings (P/E) ratio of 18.3X is lower than the industry average of 33.2X. Presently, it holds a Value Score of B.
P/E Ratio Forward Twelve Months (F12M)
Image Source: Zacks Investment Research
Our Final Take
Hologic’s broad-based performance in the international markets has supported its rebound from pandemic-induced declines, positioning it to capture more shares in new, underdeveloped markets. A solid operational focus has brought its margin performance closer to the pre-pandemic levels. Yet, the ongoing Skeletal issues and uncertainties from the USPSTF guidelines might adversely affect the performance of this Zacks Rank #3 (Hold) stock. New investors may want to play cautiously and seek a better entry point. For those already invested in the stock, the current undervaluation suggests that it is a worthwhile option to hold.
Image: Shutterstock
With HOLX Stock Near 52-Week High, Should You Buy More or Play Safe?
Shares of Hologic (HOLX - Free Report) are showing impressive gains of late, trading quite near its 52-week high of $84.67. The stock closed Thursday at $80.99, just 4.3% below the highest point. In the past three months, the women’s health company’s stocks have gained 8.5%, surpassing the industry’s growth of 2% and the S&P 500’s return of 2.8%. Hologic has also performed better than the industry rivals QIAGEN (QGEN - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .
3-Months Performance
Image Source: Zacks Investment Research
The stock is also trading above its 50-day and 200-day moving averages, suggesting robust investor confidence and a positive market outlook.
HOLX Shares Trade Above 50-Day and 200-Day SMA
Image Source: Zacks Investment Research
Hologic Shines Internationally, Banks on Growth Drivers
The latest third quarter of fiscal 2024 ended the long streak of COVID-driven declines for Hologic, wherein both the top and bottom lines returned to growth. This impressive performance is boosted by the early wins in the company’s international business, reflecting its strategy of direct approach and efforts to improve the standards of care in new markets. In the Diagnostics segment, the Molecular Diagnostics arm stands out as the principal revenue generator with vast potential in the untapped international markets. The ever-expanding menu on the Panther instrument system, combined with its superior workflow and ease of use have driven increased demand and bolstered Hologic’s competitive position in the industry.
Additionally, the company is poised to increase its share in global STI (sexually transmitted infection) testing, having dominated the U.S. market for years. The introduction of liquid-based pap tests in new regions is likely to accelerate growth in the cytology and cervical cancer screening market. Hologic’s Genius AI digital cytology system, approved by the FDA earlier this year, is effectively addressing the lack of cytologists in markets outside the United States.
In the Surgical division, the company is experiencing greater success with Myosure internationally, driven by the increasing demand for minimally invasive options in underpenetrated markets. Myosure’s position as the only minimally invasive alternative to a complete hysterectomy in many regions represents a promising opportunity for its further expansion. Meanwhile, the increasing adoption of breast imaging platforms, both domestically and internationally, is driving the revenue growth of the Breast Health segment. The acquisition of Endomagnetics has further diversified the business, adding cutting-edge interventional breast care solutions to the portfolio.
HOLX’s Focus on Margin Improvements
Not only revenues and EPS growth, but Hologic also made a strong return to the pre-pandemic operating margin levels in the fiscal third quarter. This is even more impressive, given the company’s substantial growth in the international business, which has expanded more than 40% since 2019. Hologic has recaptured its strong sector margin profile by focusing on operational efficiency and moving past the amortization of costly chips in Breast Health purchased during the chip shortage. Although its newer revenue growth drivers come with a lower operating margin profile, the company confidently aims to achieve the 31.5% pre-pandemic margin for the fiscal 2025.
Concerns Weighing on Hologic
Hologic’s Skeletal Health business has been marred by headwinds from a temporary halt in shipments of Horizon DXA systems. The stop-ship mainly resulted from a non-conformance regarding the electromagnetic compatibility requirements. This also made the company reduce the midpoint of the prior revenue guidance by $5 million for fiscal 2024, representing nearly a $20 million setback from the ongoing issues.
Meanwhile, the updated United States Preventive Services Task Force (USPSTF) Breast Cancer Screening Guidelines recommends all women get screened for breast cancer every other year, starting at age 40 through 74. This shifts from the previously recommended starting age of 50. Hologic is not happy with the update and feels these guidelines are inadequate. The company is currently urging for annual screenings to ensure early detection and improved outcomes. Furthermore, any adverse developments in the Task Force’s cervical cancer screening guidelines can bring further uncertainties.
HOLX Estimate Trend
Estimates for Hologic’s fiscal 2024 earnings have increased by 0.2% to $4.09 in the past 30 days.
Image Source: Zacks Investment Research
HOLX Stock Appears Undervalued
Valuation-wise, Hologic’s shares are trading at a discount compared to its peers in the industry. The stock has a forward 12-month price-to-earnings (P/E) ratio of 18.3X is lower than the industry average of 33.2X. Presently, it holds a Value Score of B.
P/E Ratio Forward Twelve Months (F12M)
Image Source: Zacks Investment Research
Our Final Take
Hologic’s broad-based performance in the international markets has supported its rebound from pandemic-induced declines, positioning it to capture more shares in new, underdeveloped markets. A solid operational focus has brought its margin performance closer to the pre-pandemic levels. Yet, the ongoing Skeletal issues and uncertainties from the USPSTF guidelines might adversely affect the performance of this Zacks Rank #3 (Hold) stock. New investors may want to play cautiously and seek a better entry point. For those already invested in the stock, the current undervaluation suggests that it is a worthwhile option to hold.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.